Business profile: All eyes on what will happen NXT

David Pearson tells Philip Aldrick he won't buy another mobile phone or car until they boast his firm's flat speakers

David Pearson makes an unlikely icon. In fact, "Icon" would be the last word that the prim and considered 54 year old would use to describe himself, but there's no avoiding the fact that the chief executive of flat speaker pioneer NXT has a bigger fan base than most fledgling popstars.

The hopes of at least 17,000 private shareholders rest on Pearson's unlikely-looking shoulders, many of them with an almost evangelical belief that NXT is about to revolutionise speaker technology, conveniently making them millionaires in the process.

He's well aware of these high expectations. Keeping shareholders happy "can be quite demanding", he says with the world-weariness of Mick Jagger halfway through a signing session. Last year, after unveiling in the space of just four months the first lap top, car, aeroplane and LCD television with NXT technology, he received a letter from one private investor complaining about lack of newsflow. "At that point you know there are some individuals whose expectations you're never going to be able to satisfy."

If some shareholders can't get no satisfaction, the appeal to most of them is the simplicity of NXT's proposition. In the words of one zealous investor: "This technology will change the way we listen to audio output. NXT is a winner." You either believe or you don't, and NXT had enough small-scale believers in its flatscreen technology to keep the faith when the institutions gave up. Private individuals now account for more than 70pc of the stock and investor days often see 200 of them turning up – a good turnout for a FTSE 100 company let alone a £65m one.

Of course, NXT wasn't always quite so small. Once a £1.6billion dotcom darling, it now sits among a small band of single-product technology companies that survived the crash. One, Trafficmaster, has managed to turn its car navigation technology into a profitable enterprise.

Others, like Torotrak with its supposedly revolutionary gearbox, are slowly devouring what cash is left from their overpriced listings. According to house broker Bridgewell, NXT will break even in 2006. Not everyone subscribes to the fairy tale.

"I'll believe it when I see it. Their track record of meeting forecasts is extremely poor," says a sceptical Alex Jarvis, of former house broker KBC Peel Hunt. NXT has about £5m of cash left and is consuming £3m a year. Development to date has cost about £60m. "I'd be amazed if there's not another rights issue," she says.

To add to NXT's problems, rival technologies are in development and its 1,200 patents will expire.

Precarious as its position seems, Pearson doesn't permit negative thinking. It must be part of the "discipline" that he is proud to have gathered from his Oxford law degree and the subsequent four years spent as a toothpaste salesman in Yorkshire for US consumer products group Procter & Gamble.

When I try stirring him up by suggesting NXT's technology is little more than a novelty – like its cardboard speakers, he rides back in his chair and, with genuine alarm, responds: "I don't understand that comment in any way at all. What I see is companies like Philips, TDK, 3M, NTT – serious companies like that – using the technology. So how can someone say it's a novelty?"

Of the 3billion speakers estimated to be sold annually, NXT's technology was used in 3.1m last year. I'm no arbiter, but a 0.1pc share of the market hardly seems mainstream. "It took Dolby seven to eight years to build a reputation and persuade everyone to fall into line. In general, new technology does take that sort of time. There are very few exceptions." It feels churlish to point out 10 years have passed since the first of NXT's flat speaker patents was filed.

An academic who passed the Oxford entrance exam at 16 then ditched his qualifications for the challenges of the business world, he seems an odd convert to the faith. Before his appointment in 2000, he scarcely knew NXT from his daughter Michelle's shorthand text messaging. He may refer to his car as "a Sony CD player fitted in a Jaguar", but Pearson admits he is "not excited by technology itself but by what it can do for you. The skill I bring is to help people understand how something can be used."

That's just as well, because using NXT speakers is a lot simpler than helping people understand the science. It is based on something called "bending wave physics" that tends to be counter-intuitive to sound engineers working with the 100-year-old technology of cone and piston speakers.

NXT converts flat objects into amplifiers by making them resonate much like a soundboard in a piano or the front and back panels of a cello. "Listening to NXT speakers is similar to the natural way in which we hear music," Pearson reckons. "It washes over us, it doesn't get blasted at us. Conventional loudspeakers propel sound. It isn't natural."

Television monitors, mobile phone casings, car panels and even cardboard boxes have been converted into speakers using NXT's know-how.

As you'd expect, PhDs abound among the staff. "I'd put our acoustic team in the top five in the world. There are a couple of guys who play Robot Wars in their spare time – two of the best this country has produced. We have some very special people," he says, without a hint of irony.

It's a necessary debt of gratitude to his 40-odd engineers, led by the man who forged the way – chief technology officer Henry Azima, whose brother Farad founded NXT in 1977 when it was the traditional speaker company Mission Electronics.

For the head of a cutting edge outfit, Pearson likes his old fashioned comforts: reading, watching his home team Manchester United, listening to opera. Fittingly, his Chilean wife – an art restorer – is called Carmen. The home is equipped with a mixture of NXT gear and Sony, where he quadrupled sales as UK managing director between 1988 and 1998 – "my single greatest achievement", he says.

His vision for NXT is to turn it into the next Dolby. Unlike Dolby, though, NXT gave up manufacturing several years ago and simply licenses its technology. But it's Dolby's brand recognition Pearson craves. "Dolby is an inspiration. It established not only the royalty model but also the brand.

Their patents expired long ago but they are still able to charge a royalty for using the brand as the consumer wants the reassurance." He does know a thing or two about branding, having opened up the market for Mars in Chile in the early 1980s, when he met his wife, and built up Sony in the UK.

At the moment, though, such ambition can't help but seem a little deluded. Even Pearson concedes that NXT has yet to prove it is an economically viable technology. There are also limitations at the lower end of the sound spectrum, though the acoustic quality at the upper end is generally considered better than most pistonic speakers.

Hundreds of millions of NXT speakers will need to be sold before the company starts turning a reasonable profit, as it makes an average of just 35p in royalties from each one. Pearson remains relentlessly positive, nevertheless. "We've convinced somebody in each of our target markets. That takes us past the first barrier – does it work, is it roadworthy, can I use it? Those questions have been nailed."

NXT is licensed with 250 companies and Pearson says it's just a matter now of removing the scales from audio technicians' eyes. He makes conversion sound deceptively simple. To illustrate why, he draws on a favourite anecdote. "Clients have various `Golden Ears' – people who can genuinely hear the difference in hi-fi performance – and some want to hear their own music. One guy produced his own CD and asked us to play it. So we did, and he said: `I haven't heard it that good since I conducted it'."

As a pledge of allegiance, Pearson has made "certain promises" to himself. "I won't buy a new mobile phone or car until I can get one with NXT." No European mobiles are available yet and the only car with the technology, a TVR, "really isn't my type". His four-year old Nokia looks ready to pack up any time soon. For the 17,000 faithful, though, it's the least he can do. Maybe their replacement will be the Holy Grail they have been waiting for.